Marketing: Managing Profitable Customer Relationshipsof+Marketing+01.pdf · Marketing: Managing Profitable Customer Relationships Chapter 1 Objectives Be able to define marketing

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Marketing: Managing Marketing: Managing Profitable Customer Profitable Customer

RelationshipsRelationships

Chapter 1Chapter 1

Objectives

Be able to define marketing and Be able to define marketing and discuss its core concepts.discuss its core concepts.Be able to define marketing Be able to define marketing management and compare the management and compare the

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five marketing management five marketing management orientations.orientations.

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Objectives

Understand customer Understand customer relationship management relationship management and strategies.and strategies.Realize the major challenges Realize the major challenges

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facing marketers in the new facing marketers in the new “connected” millennium.“connected” millennium.

What is Marketing?

Marketing is managing profitable Marketing is managing profitable customer relationshipscustomer relationships

Attracting new customersAttracting new customersRetaining and growing current Retaining and growing current

tt

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customerscustomers“Marketing” is NOT synonymous “Marketing” is NOT synonymous with “sales” or “advertising”with “sales” or “advertising”

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What is Marketing?

Kotler’s social definition:Kotler’s social definition:““Marketing is a social and Marketing is a social and managerial process by which managerial process by which individuals and groups obtain individuals and groups obtain

h t th d d t th hh t th d d t th h

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what they need and want through what they need and want through creating and exchanging products creating and exchanging products and value with others.”and value with others.”

What Can Be Marketed?

GoodsGoodsS iS iServicesServicesPlacesPlacesIdeasIdeasEventsEventsPersonsPersonsPropertiesProperties

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OrganizationsOrganizationsInformationInformationExperiencesExperiences

What is being marketed in this ad?

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Figure 1-1:

Core Marketing Concepts

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Discussion Question

ResellersResellers are a primary are a primary market for Nike’s market for Nike’s products. products. Describe theDescribe the exchangeexchange

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Describe the Describe the exchange exchange processprocess between Nike between Nike and resellers.and resellers.

Think beyond the obvious.Think beyond the obvious.

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Figure 1-2:

Elements of a Modern Marketing Systemode a e g ys e

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Marketing Management

M k ti tM k ti t i “thi “thMarketing managementMarketing management is “the is “the art and science of choosing art and science of choosing target markets and building target markets and building profitable relationships with profitable relationships with them ”them ”

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them.them.Creating, delivering and Creating, delivering and communicating superior communicating superior customcustomeer value is key.r value is key.

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C t M tC t M tCustomer Management:Customer Management:Marketers select customers that Marketers select customers that can be served well and profitably.can be served well and profitably.

Demand Management:Demand Management:

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Marketers must deal with different Marketers must deal with different demand states, ranging from no demand states, ranging from no demand to too much demand.demand to too much demand.


Demarketing:Commuter Connectionspromotes the use of mass transit and carpooling as an alternative to driving alone

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driving alone.

CommuterConnections

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Production Concept

Product Concept

Selling C t

Marketing C t

Management Orientations

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Concept ConceptSocietal

Marketing Concept

Figure 1-3:The Selling and Marketing

Concepts ContrastedConcepts Contrasted

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Figure 1-4:Considerations Underlying the

Societal Marketing ConceptSocietal Marketing Concept

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Figure 1-5:Relationship Between Customer

Satisfaction and Loyalty

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CRM

C t l ti hiC t l ti hiCustomer relationship Customer relationship management (also called CRM) management (also called CRM) is defined as:is defined as:

“the overall process of building “the overall process of building d i t i i fit bld i t i i fit bl

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and maintaining profitable and maintaining profitable customer relationships by customer relationships by delivering superior customer delivering superior customer value and satisfaction.”value and satisfaction.”

CRM

It t 5 t 10 ti MORE tIt t 5 t 10 ti MORE tIt costs 5 to 10 times MORE to It costs 5 to 10 times MORE to attract a new customer than it attract a new customer than it does to keep a current does to keep a current customer satisfied.customer satisfied.Marketers must beMarketers must be

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Marketers must be Marketers must be concerned with the concerned with the lifetime value of the lifetime value of the customercustomer..

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CRMCustomer value and Customer value and

ti f titi f tiKey ConceptsKey ConceptsAttracting, Attracting, retaining and retaining and growing growing customerscustomers

satisfactionsatisfactionPerceptions are keyPerceptions are keyCreated by meeting/ Created by meeting/ exceeding expectationsexceeding expectations

Loyalty and retentionLoyalty and retentionMany benefits of loyalty Many benefits of loyalty Increases as satisfaction Increases as satisfaction

Key ConceptsKey Concepts

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Building Building relationships and relationships and customer equitycustomer equity

levels increaselevels increaseDelighting consumers Delighting consumers should be the goalshould be the goal

Growing customer shareGrowing customer shareCrossCross--sellingselling

CRM

C t itC t itKey ConceptsKey Concepts Customer equityCustomer equityTotal combined Total combined customer lifetime customer lifetime values of all values of all customerscustomersMeasures firm’sMeasures firm’s

Attracting, Attracting, retaining and retaining and growing growing customerscustomers


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Measures firm s Measures firm s performance, but in performance, but in a manner that looks a manner that looks to the futureto the future

custo e scusto e sBuilding Building relationships and relationships and customer equitycustomer equity

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CRMCustomer relationship Customer relationship Key ConceptsKey Concepts levels and toolslevels and tools

Target market typically Target market typically dictates type of dictates type of relationshiprelationship

Basic relationshipsBasic relationshipsFull relationshipsFull relationships

Customer loyalty andCustomer loyalty and

Attracting, Attracting, retaining and retaining and growing growing customerscustomers


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Customer loyalty and Customer loyalty and retention programsretention programs

Adding financial Adding financial benefitsbenefitsAdding social benefitsAdding social benefitsAdding structural tiesAdding structural ties

Building Building relationships and relationships and customer equitycustomer equity

Marketing Challenges

Technological advances, rapid Technological advances, rapid globalization, and continuing globalization, and continuing social and economic shifts are social and economic shifts are causing marketplace changes.causing marketplace changes.Major marketing developmentsMajor marketing developments

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Major marketing developments Major marketing developments can be grouped under the theme can be grouped under the theme of of ConnectingConnecting..

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Figure 1-6:Today’s Marketing Connections

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Advances in computers,Advances in computers,ConnectingConnecting

Via technologyVia technologyWith customersWith customersWith marketingWith marketing

Advances in computers, Advances in computers, telecommunications, telecommunications, videovideo--conferencing, etc. conferencing, etc. are major forcesare major forces

Databases allow for Databases allow for customization of customization of products, messages products, messages and analysis of needsand analysis of needs

ConnectingConnecting

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With marketing With marketing partnerspartnersWith the worldWith the world

The InternetThe InternetFacilitates anytime, Facilitates anytime, anywhere connectionsanywhere connectionsFacilitates CRMFacilitates CRMCreates marketspacesCreates marketspaces

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Selective relationshipSelective relationshipConnectingConnecting Selective relationship Selective relationship management is keymanagement is key

Customer profitability Customer profitability analysis separates analysis separates winners from loserswinners from losers

Growing “share of Growing “share of customer” customer”



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CrossCross--selling and upselling and up--selling are helpfulselling are helpful

Direct sales to Direct sales to buyers are growingbuyers are growing



P t l ti hiP t l ti hiConnectingConnecting Partner relationship Partner relationship management management involves:involves:

Connecting inside Connecting inside the companythe companyConnecting with Connecting with



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outside partnersoutside partnersSupply chain Supply chain managementmanagementStrategic alliancesStrategic alliances


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GlobalizationGlobalizationConnectingConnecting GlobalizationGlobalizationCompetitionCompetitionNew opportunitiesNew opportunities

Greater concern for Greater concern for environmental and environmental and social responsibilitysocial responsibility



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Increased marketing Increased marketing by nonprofit and by nonprofit and publicpublic--sector entitiessector entities

Social marketing Social marketing campaignscampaigns


Connecting with Values . . .

The Body Shop

Visit the “Our Values” and “About Us” sections of The Body Shop’s web site.

How might the values espoused by the company influence the manner in which the Body Shop . . .

e ody S op

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• Chooses their strategic partners?• Advertises fragrances to consumers?• Develops new products?• How might these decisions in turn

impact “the bottom line”?The Body Shop

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cAmazonAmazon

Strong sales, no Strong sales, no profitsprofitsCustomerCustomer--driven driven to its coreto its coreEach customer’sEach customer’s

Provides great Provides great selection, good selection, good value, discovery value, discovery as well as as well as convenienceconvenience

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Each customer s Each customer s experience is experience is uniqueunique

A true online A true online communitycommunity

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Marketing: Managing Profitable Customer Relationshipsof+Marketing+01.pdf · Marketing: Managing Profitable Customer Relationships Chapter 1 Objectives Be able to define marketing